Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
1998-1999-2000
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF
REPRESENTATIVES
HEALTH LEGISLATION AMENDMENT
BILL (NO 3) 2000
EXPLANATORY
MEMORANDUM
(Circulated
by authority of the Minister for Health and Aged Care,
the Hon. Dr
Michael Wooldridge, MP)
ISBN: 0642 437300
HEALTH LEGISLATION AMENDMENT BILL (No 3) 2000
This Bill amends the National Health Act 1953 (NHA)
to:
• enable the private health industry to fund ‘outreach
services’, that is, alternative models of health care delivery, as a
direct substitute to in-hospital care for admitted
patients;
• protect registered health benefits organizations from
any action for a breach of duty of confidence (or breach of a similar
obligation) in relation to the reasonable disclosure of membership eligibility
information to hospitals or day hospital facilities with which the organizations
have a Hospital Purchaser Provider Agreement;
• to clarify the
definitions ‘adult beneficiary’ and ‘hospital cover’ for
the purposes of the Lifetime Health Cover (LHC) rules; and
• provide all refugees with 12 months after they become eligible for
Medicare in which to take out hospital cover without incurring a LHC
penalty.
The principal amendments contained in the Bill are those dealing
with ‘outreach services’. These amendments extend the definition of
‘hospital treatment’ in the NHA to enable outreach services as a
substitute for in-hospital care to better reflect current care practices. This
also requires a consequential technical amendment to the Health Insurance Act
1973 (HIA) as the term ‘hospital treatment’ is also used in that
Act.
The aim of these amendments is to enable private patients in both
public and private hospitals to receive the same equitable care choices
available to public (Medicare) patients in public hospitals. This, in turn,
will improve the efficiency and flexibility of the private health insurance
industry. It will also improve the attractiveness to consumers of private
health insurance products by providing greater value for money for their
hospital coverage.
Considerable interest in private health outreach
programs has been generated over the past two years. Six patient trials have
been piloted with the involvement and support of the Commonwealth, consumer
representatives, participating private hospitals, participating health funds and
the medical profession.
The Federal Government is committed to promoting
efficiency in the private sector, containing the cost of acute care and
improving the private health insurance product. Following this amendment health
funds should have the flexibility to offer privately insured patients alternate
models of quality care as a substitute to in-hospital care in a public or
private hospital.
The remaining amendments are principally of a
machinery or technical nature.
The Health Legislation Amendment Bill (No 3) 2000 will have no significant
impact upon the finances of the Commonwealth.
REGULATION IMPACT
STATEMENT
To achieve this, the Department of Health and Aged Care has been
promoting alternative models of care to overnight stays in hospital through the
development of a number of pilots to test outreach services in the private
health sector.
Six trials involving outreach services that are providing substitute care to
in-hospital care for admitted patients are currently in progress under National
Health Regulations. Each trial involves an agreement between the participating
funds and hospitals to provide outreach services as a substitution for
in-hospital care for an agreed daily health insurance benefit. Outreach
services are services that are provided by or on behalf of the participating
hospitals. The outreach care can be provided directly by the hospital or
provided on behalf of the participating hospital by sub-contracted local
services. The types of services that are most likely to be subcontracted out by
hospitals include clinical nursing services, "meals on wheels" and home care.
Home care services could include housekeeping or personal care services.
A number of outreach service trials have been running for some time and the
outcomes to date have been positive. The private health insurance patient
trials have been designed to test if the provision of acute care can be cost
effectively and safely substituted by outreach
services
Problem
The primary
problem with the existing private health insurance legislation is that health
funds have been prevented from expanding the range of hospital health services
that may be privately covered in line with the expansion of public hospital
cover. Public patients in the public hospital system have been able to receive
these services for some time. Private patients have been unable to use their
hospital fund membership to receive hospital outreach services, so may stay in
hospital longer than necessary. This also means that private health insurance
is not as attractive to consumers as it might be otherwise.
Under the
National Health Act 1953, funds can only pay benefits from hospital
tables for admitted patients within the four walls of the hospital. This means
that funds have only been able to offer hospital-in-the-home and outreach
services to their members from their ancillary tables that are not eligible for
inclusion in the reinsurance arrangements. An additional limitation under
ancillary table arrangements is that Medicare benefits are not available to the
attending doctor. Funds are unable to pay benefits towards the cost of medical
services covered by the Medicare Benefits Schedule.
A health fund may
currently pay benefits for outreach services under a table of ancillary
benefits. However, the payment of benefits for these services is generally
limited because health funds cannot reinsure ancillary health products in the
health benefits reinsurance trust fund. The reinsurance trust fund is designed
to support community-rating, which is an underlying principle of the current
private health insurance system. Community rating requires health funds to
charge the same premiums for each member of an applicable benefits arrangement
regardless of age, sex, claims history or health
status.
Objective:
The objective is consistent with the Government’s strategic
direction of a quality health care system that provides affordable private
health care options.
A legislative amendment to the National Health Act 1953 and the
Health Insurance Act 1973 is necessary to enable private health insurance
funds to pay benefits from hospital tables for outreach patients as a direct
substitution for what would otherwise have been provided in an admitted setting.
Impact Analysis
The following groups are the major stakeholders
affected:
• consumers of private health
insurance;
• health funds;
• private hospitals;
• doctors;
• outreach service providers.
The impact of the option one on the Commonwealth is expected to be cost
neutral as an approved outreach program is a direct substitute for in-hospital
care. Therefore, Medicare benefits for medical services will be paid at an
amount equal to 75 % of the schedule fee with the funds paying 25% as is the
case with all other admitted hospital patients.
Impact of the
option on consumers of private health
insurance:
• increasing the attractiveness of the private
health insurance product by allowing funds to offer cover for alternatives to
in-hospital care that will provide greater benefits and value for money for
their coverage;
• reduce the risk of infection as there is a link
between length of stay in hospital and an increased risk of infection;
and
• patients are treated in familiar surroundings (the place they
usually reside). This is particularly of benefit for older Australians who can
experience confusion and disorientation when treated in a hospital environment,
this could delay a patient’s recovery and prolong their hospital stay.
There is also a distinct advantage when young children are
involved
Impact on health funds:
• increases the financial incentive for funds to provide
substitute care alternatives as benefits paid for this substitute care will be
considered part of the reinsurance arrangements;
• funds can improve
the efficiency of their operations, as their costs for hospital treatment of
private patients will be lower as hospital treatment will be provided in a lower
cost setting;
• increases the attractiveness of their products and
therefore increases their market opportunities; and
• should reduce
costs for funds in the provision of hospital treatment (the arrangement between
the funds and participating hospitals is a commercial-in-confidence agreement).
The Commonwealth is not involved in the funding agreements between the
participating parties. The funds negotiate directly with hospitals.
• increases the attractiveness of their services;
• enables
private hospitals to offer choices in the setting of where hospital treatment
can be provided to patients and medical practitioners;
• increases
market opportunities;
• may have an impact on some in-hospital services
as some services may be outsourced, an example being home help
services;
• enables private hospitals to offer similar outreach
services to those offered by the public system; and
• reduces the
length of stay within the physical confines of the “hospital”, thus
freeing up beds for acutely ill patients and increasing throughput.
• enables doctors to offer their private health care clients the
same cost choices of alternative care arrangements as public patients
receive.
• participating hospitals may provide outreach services themselves or
through local service providers. The outreach care can be provided directly by
the hospital or provided on behalf of the participating hospital by
sub-contracted local services.
• the likelihood of increased market
opportunities for home care services providers.
Impact of the option on consumers of private health
insurance
• private patients will not the receive the same
choices as public patients receive of where their hospital treatment may be
provided; and
• private patients will not have the option of receiving
hospital treatment in familiar surroundings
Impact on health
funds:
• provides no financial incentive for funds
to provide substitute care;
• decreases the flexibility of funds to
improve the efficiency of their operations, as hospital treatment costs will not
able to be provided in a lower cost setting; and
• will not increase
the attractiveness of their products to consumers and funds will be prevented
from providing greater value for money.
• will not provide the same attractiveness of their product and
services to private patients as public patients and they will look to the public
system to provide this service .
• doctors will be unable to offer the same choices of where
hospital treatment can be provided to their private patients as their public
patients receive.
Impact on Outreach Services
• fewer market opportunities for private local health and home care
service providers.
Recommended Option
Option 1 is the preferred option as this
option will enable the private health care industry to have the flexibility to
offer privately insured patients alternate models of quality care as a
substitute to in-hospital care in a public or private hospital.
This
option meets the Government’s objective to implement measures for making
private health insurance more attractive to consumers by legislative change to
enable private health insurance products to cover out-of-hospital care.
There are six trials involving outreach services that are providing
substitute care to in-hospital care for admitted patients currently in progress.
Each trial has an overseeing steering committee. The steering committees are
comprised of the Commonwealth, a consumer representative, the private hospital,
participating health funds and the medical profession. All stakeholders have
been consulted through-out the implementation of the trials through the steering
committees. The outcomes and feedback to date from the individual steering
committees on the trials have been positive.
A two stage national
evaluation commenced in October 1999. This involved the evaluation of three
private sector outreach trials. It is anticipated that the National Report
evaluating these three trials will be available to support the amendment. As
part of the national evaluation, surveys are being conducted of all stakeholders
and participants.
Stage Two of the National Evaluation is expected to
commence in May 2000. It will involve a similar evaluation of additional
private sector outreach trials. (Three new trials are currently operating and
more are expected to be established soon.) It is expected that a Stage Two
National Evaluation Report will be available for consideration when the Bill is
debated.
A national Evaluation Steering Committee comprised of
representatives from each of the steering committees is overseeing the
individual trials. The Commonwealth, consumer’s private hospitals, health
funds and appropriate medical specialists are represented on the
Committee.
Considerable interest in private health industry outreach
programs has been generated over the past year. Health funds and private sector
health care providers have expressed interest in the potential for improved
patient care and increased cost efficiency.
The preferred option will be implemented through amendments to the
National Health Act 1953 and the Health Insurance Act 1973. The
commencement date of the amendments will be 6 months after Royal Assent. This
will facilitate the development of guidelines to enable the establishment of
outreach services in consultation with all the relevant stakeholders.
Under the proposed amendment, hospitals and insurance funds seeking to
provide outreach services to private patients will be required to gain
Ministerial approval before providing an outreach service. Only approved
services will be covered by hospital table insurance arrangements. To gain
approval, hospitals would be required to meet minimum guidelines. Approval
would only be given to programs with proven clinical pathways, with demonstrated
benefits for patients, and that are able to demonstrate cost efficiencies. This
will lead to better practice and improved client outcomes.
HEALTH LEGISLATION AMENDMENT BILL (NO 3) 2000
This clause provides that the amending Act may be cited as the Health
Legislation Amendment Bill (No 3) 2000
Clause 2 specifies when each of the Schedules of amendments in this Bill
will commence:
• Schedule 1 – Outreach services will commence on a day to be fixed by proclamation, or if the proclamation does not occur within 6 months of the day that this Bill receives Royal Assent, Schedule 1 will commence on the first day at the end of this 6 month period;
• Schedule 2 – Disclosure of information will commence on Royal Assent; and
• Schedule 3 – Lifetime health cover will commence on 1 July 2000
immediately after the commencement of the National Health Amendment (Lifetime
Health Cover) Act 1999, that is, 1 July 2000.
Clause 3:
Schedule(s)
This clause notes that each Act that is specified in the
schedules is to be amended as set out in the applicable items in the Schedule
concerned.
This clause provides that the amendment in Schedule 2 relating to
disclosure of information only applies in relation to information disclosed by a
health fund on or after the commencement of that Schedule (ie. information
disclosed after Royal Assent).
This Schedule amends the National Health Act 1953 (NHA) and the
Health Insurance Act 1973 (HIA) to expand the meaning of ‘hospital
treatment’ to include approved ‘outreach services’ provided by
or on behalf of a hospital or day hospital facility as services that a health
fund will be able to cover as part of an ‘applicable benefits
arrangement’.
An ‘applicable benefits arrangement’ is
a table of hospital health benefits which may cover some or all hospital
treatment received by a private patient and any associated medical services
provided by or on behalf of a medical practitioner which are eligible for a
Medicare payment. Outreach services will provide a direct substitute for
in-hospital care by enabling health funds to pay benefits for approved health
services that are provided beyond the four walls of the hospital.
As the
NHA currently stands a fund may only pay benefits from an applicable benefit
arrangement for admitted patients. To provide benefits for outreach services,
funds have been restricted to offering outreach services to members as part of a
table of ancillary health benefits. Ancillary health benefits are not eligible
for inclusion in the reinsurance trust arrangements. The reinsurance trust fund
supports the principle of community rating by sharing the high-risk members who
contribute to applicable benefits arrangements. As a result there is no
incentive for funds to actually insure those services. This has been a major
inhibitor for funds to support best practice by enabling outreach care as a
direct substitute for in-hospital treatment.
This Bill provides a
mechanism by which funds will be able to pay patient benefits from hospital
tables and access the reinsurance pool (where eligible) in providing specified
outreach services as a direct substitute to in-hospital care.
The items
contained in Schedule 1 amend the NHA and the HIA to enable the Minister
to specify which hospital and day hospital facility may provide outreach
services, and the duration for which those services may be offered. Outreach
services will need to demonstrate that clinical standards and high quality
outcomes are being maintained and are ongoing. This will enable:
• private patients in public or private hospitals to receive approved
outreach services and better value for their hospital care.
Health
Insurance Act 1973
Item 1
This item inserts a Note
after subsection 3(1A) of the HIA to flag that the definition of ‘hospital
treatment’ in section 3 of the HIA will be expanded to include
outreach services. The purpose of the Note is to recognise that, except where
excluded by new subsection 5C(2) of the NHA, references to ‘hospital
treatment’ in both the HIA and the NHA will include outreach services
specified by the Minister.
National Health Act 1953
Item 2
This item
inserts a definition of outreach services in subsection 4(1) of the NHA.
An outreach service means any service specified in a determination under
new section 5D of the NHA (inserted by Item 4 of this Schedule).
As a result of broadening the concept of ‘hospital treatment’ to include outreach services a private patient will no longer need to attend the hospital or day hospital facility to be admitted, or necessarily be discharged when the patient leaves the hospital or day hospital facility:
• if a patient receives an approved outreach service in substitute for in-hospital treatment the hospital may admit the person regardless of the fact that the person does not attend the hospital;
• if a patient moves from hospital to an approved outreach service, eg.
hospital in the home, then the person may continue to be a patient of the
hospital until the treatment is complete at which time the patient may be
discharged.
Item 3 broadens the definition of ‘patient’ in
relation to day hospital facilities to provide that a person may continue to be
a patient if participating in an approved outreach service.
This item inserts two new sections after section 5B:
New section 5C is an interpretative provision which enables the extension
of references to ‘hospital treatment’ (other than in an excluded
provision) in the NHA and the HIA to include outreach services provided by or on
behalf of a hospital or day hospital facility. As a result a reference to
‘hospital treatment’ in either Act will also include outreach
services approved by the Minister under new section 5D. These services can be
provided by the approved hospital or provided on behalf of that hospital by
services subcontracted by that hospital.
New subsection 5C(1) also provides that:
• references to hospital treatment in or at a hospital/day hospital facility will include an approved outreach service provided by or behalf of a hospital or day hospital facility; and
• references to patients in both Acts receiving treatment in or at hospital/day hospital facility will include approved outreach services.
The effect of the amendment is that a fund will be able to provide
benefits under its applicable benefits arrangements (hospital tables) for
private patients in public or private hospitals who are receiving approved
outreach services.
The only provisions in the HIA and NHA that new section 5C will not apply to
are specified in subsection 5C(2). It is intended that the following
provisions in each Act will retain their current meanings: subsection 5B(3) of
the HIA; section 67 of the NHA; and Division 5A of Part VI of the NHA.
New section 5D provides that the Minister may specify in a written determination the services that may be provided as an outreach service. When the service is determined to be an outreach service, then a fund may pay benefits towards that service under an applicable benefits arrangement.
Administrative guidelines will be established to help determine whether
an outreach service should be specified under new section 5D. In order to be
specified as an outreach service the service will need to
be:
• safe;
• sound clinical practice;
• accepted
by all levels of the profession;
• beneficial for the patients; and
• able to demonstrate cost efficiencies.
The determination will
continue in force for the period specified in the determination: new
subsection 5D(2).
A determination under new section 5D is a disallowable instrument: new
subsection 5D(3).
At the conclusion of a determination, the
outreach services will be reviewed to ensure that quality outcomes and standards
were met and maintained before the Minister may make another determination to
renew the outreach service.
These items make minor amendments to paragraphs 73BD(2)(d) and
73BDAA(1)(a) to ensure that existing provisions in the NHA do not restrict the
operation of outreach services.
Item 5 amends paragraph 73BD(2)(d) by omitting “to the hospital or the day care facility”. This amendment ensures that the hospital or day hospital facility will still have to provide informed financial consent to a patient in relation to outreach services, regardless of whether the services are provided by:
• the hospital or day hospital facility; or
• a contractor of
the hospital or day hospital facility.
Item 6 amends paragraph
73BDAA(1)(a) by omitting “at the hospital or day hospital”
and substituting “to patients of the hospital or day care
facilities”. The purpose of this amendment is to ensure that
hospital purchaser provider agreements can be extended to cover professional
services provided under a practitioner agreement to admitted patients receiving
outreach services.
This Schedule makes a minor amendment to section 73G of the National
Health Act 1953 (NHA) to protect registered health benefits organisations
from certain legal proceedings in relation to the disclosure of information to a
hospital or day hospital facility where the disclosure is reasonably necessary
to enable the hospital or day hospital facility to comply with its obligations
under paragraph 73BD(2)(d) of the NHA, that is to provide a private patient
with informed financial consent.
Informed financial consent is a
fundamental element of any hospital purchaser-provider agreement (HPPA).
Subsection 73G(2) protects a hospital, day hospital facility or any person
acting on behalf of the hospital or day hospital facility from legal action for
disclosure of information where the disclosure is necessary to enable the health
funds to verify the payability of amounts under the HPPA. This amendment will
extend the protection from liability to the health fund that supplies
information to a hospital or day hospital facility in order to enable informed
financial consent.
This item inserts a new subsection 73G(2A) after subsection 73G(2),
to provide that no action may be taken against a health fund or a person acting
on behalf of the health fund for disclosure of information, if that disclosure
is made to a hospital or day hospital facility under an HPPA and the purpose of
the disclosure is to facilitate informed financial consent under
paragraph 73BD(2)(D).
Schedule 3
On 1 July 2000, Lifetime Health Cover (LHC) will come into effect when the National Health Amendment (Lifetime Health Cover) Act 1999 amends the National Health Act 1953 (NHA). Schedule 3 of this Bill makes two minor amendments to the LHC rules contained in Schedule 2 of the NHA to ensure the smooth operation of those rules on 1 July. Specifically these amendments:
• clarify the definition of ‘adult beneficiary’ and ‘hospital cover; and
• provide all refugees with 12 months after they become eligible for Medicare in which to take out hospital cover without penalty under the LHC rules.
This item clarifies that the definition of ‘adult
beneficiary’ in subsection 4(1) of the NHA includes a spouse. A spouse is
already defined in subsection 4(1) of the NHA to include a de facto
spouse.
This item clarifies the meaning of ‘hospital cover’ in
paragraph 4(1)(b) of Schedule 2 of the NHA to provide that a spouse may
have hospital cover.
This item replaces subparagraphs 5(1)(c)(i) and (ii) of Schedule 2 of the NHA to provide any adult beneficiary who:
• enters Australia on a Refugee or Humanitarian (Migrant)(Class BA) visa after 1 January 2000; or
• was or is granted a protection visa after entering Australia on or
after 1 January 2000;
with 12 months after the day on which he or she
becomes eligible for Medicare in which to take out hospital cover without his or
her contributions being increased under LHC.